Microsoft has finally acknowledged its next generation console. After months of silence, rumours, and bad news, Sony’s closest competitor has confirmed that it will reveal a “new generation of games, TV, and entertainment” on 21st May. While some feel that the Redmond-based manufacturer may struggle to usurp the PlayStation 4’s recent unveiling from a strictly gaming perspective, we reckon that it would be naive to rule out the Xbox maker entirely. But what are likely to be the biggest weapons in the company’s barracks, and what can its Japanese counterpart do to ensure that none of them land a killer blow?

In addition, the company’s almost certainly going to continue its focus on cross-marketing initiatives and DLC deals as well. We’d be shocked if the manufacturer ended its relationship with the Call of Duty franchise, which is going to be a blow to the PS4. We wouldn’t be surprised if it got more aggressive in this area than ever before, though, partnering with a large number of high-profile titles in order to give its machine a greater sense of importance. Obviously, Sony has secured the support of Bungie for its upcoming shooter Destiny, but other than perhaps Assassin’s Creed IV: Black Flag and Watch Dogs, we can’t see the company being able to match Microsoft’s cheque book, which could prove a real problem for its impending system.

Buy now, pay later

According to numerous rumours, Microsoft will sell its next generation console using a subsidised pricing model. Writing earlier today, notorious industry insider Paul Thurrott claimed that the console would cost $499 on its own, or $299 with a two-year contract. The leaker added that those that adopt the latter model will have to commit to $10 monthly charges, and will receive full Xbox Live service throughout. Typically, consumers end up paying more when opting for a subsidised service, so Thurrott’s figures don’t quite add up – but the principle remains the same.

This could be a huge threat to the PS4. While the platform holder has ensured that it’s learned from its pricing missteps with the PS3, the reality is that even if Sony’s next generation console comes in at $349 (which is unlikely, we hasten to add), it will still look more expensive than Microsoft’s subsidised $299. Whether the market adapts to such a practice remains to be seen, but there’s no doubt that the Xbox maker will earn a lot of mindshare merely from the appealing price of its platform. The test will be whether that converts to actual sales, but given the strength of the brand in certain territories, there’s no reason to believe that it wouldn’t.

Of course, it’s feasible that Sony could offer a similar solution if it takes off, but we’re informed that there are a lot of infrastructural challenges associated with a subsidised model that will take time to solve. It may be that the battle’s already over by the time that the PS4 is able to adopt a similar pricing structure. Furthermore, if the subsidised model factors in cable and television contracts – as some rumours appear to suggest – then this will create even more logistical headaches that the Japanese manufacturer may not be able to traverse. We’ll have to wait until May to learn exactly what Microsoft has in mind, but there’s no doubt that a perceived pricing problem was one of the biggest issues with the PS3, and Microsoft could be about to create the same scenario again.

The firm will also benefit from having multiple events in a short span of time. This will allow the company to focus on very specific aspects during its first presentation – such as media – while simultaneously maintaining anticipation through until E3. We get the impression that the organisation’s only going to show very short game demonstrations, but it will work its way around this by promising bigger demos in Los Angeles. This may allow the company to push its purported multimedia agenda without drawing the ire of enthusiasts – though it will be up for scrutiny if it doesn’t deliver during its second press conference.

Subsidised pricing ... WTF?? But it does sound like something that MS would try to do and I think they will succeed. MS always tried to keep the people with them look at Xbox Live one has to pay for it and indirectly they force people to play online so that they don't waste their money, they invented trophies people who like trophies will never change their system because they will loose all their trophies.

And now subsidised prices forcing people to commit themselves for at least two years. I know most people will like it but seriously it is sad to see that the gaming industry has to fall in such shallow business models.

One final note if the Xbox is really priced at $399 that is a good think for the PS4 because I think that Sony could easily place the PS4 at a lower price point especially if they introduced a paid online service which include GaiKai feature which would make up for the reduce price tag. Or if they make a PS4 + PSVITA bundle which includes PS+ subscription for a year and other goodies... although they have to convince people first that remote play will work flawlessly on the PS4 and PSVITA

I don't think they are going to be getting any timed exclusives for big titles, Microsoft would have to offer them something insane to get GTA or COD not on PS4 for a while. Timed DLC for COD won't do very much. PS has had timed DLC with battlefield too. Sony can match the subsidized pricing with PS Plus too. I don't think Microsoft will fare as well with new IPs as they would Halo either. I have a hard time seeing them continue to pump out titles too, I think they might match at launch and then they will Sony will overtake them with exclusives. I think Sony will make sure the PS4 doesn't get any software droughts. I think the nextbox's biggest draw will be media features.

@Jaz007 I agree that Sony stands a better chance of keeping building up a better library much quicker, but unless the games are all big hits, it may not matter much to the mainstream consumer who just wants to play Call of Duty.

It also depends on whether Sony's actually going to put all of its resources into PS4. As mentioned in a recent Talking Point, Gran Turismo 6 should probably be a next-gen game — but it's probably not going to be.

I think media hype will play a big role. Being here in NA and hearing xbox this and MS that, I cant tell you alot of ppl here ( unfortunately ) are greatly influenced by it. For example Bloomberg West has a quick piece on the Xbox event in may and said " Microsoft looks to maintain its lead ahead of Sony and Nintendo." Now anyone familiar with the facts knows that the 360 and PS3 are even, PS3 might even have a slight lead. And where intall base is concerned the Wii won hands down. But its sutble comments like that that people base their decisions on. Iv had friends over who only play 360 and they were shocked at what PS3 can do and what the games look like because all that they had "heard" about PS3 nothing close to true.

With Microsoft being already ramped down on 360 development it would be fool hardy to underestimate how quickly they could build a library between first party studios and third paty partners (crytek, epic, Signal Studios, etc).

Remember the ton of software support the 360 had upon launch till maybe 2010/2011.

I think a subsidy price mixed with Microsofts media hype train might be a problem.

a lot of these studios have been formed or bought a bit after 343i was made to bring back Microsoft's first party after looking at sony. Most are working on either xbla games, AAA games, or Kinect titles. As well Lionhead and Rare have went through major restructuring since Phil Harrison has joined their European outfit.

I actually think that the hype surrounding the Xbox is the most dangerous part of it. The subsidised price will only fool anyone shortsighted enough to ignore the total price, and unlike a console the plan you pay is the same one needed to operate it. Sony can match the $400 total or even do their own plan if needed.

The hype on the other hand is what will convince anyone not already planning to get it on board, and Microsoft's marketing team is very good at spread the word. They seem keen on making they're console a home entertainment device and if the rumors are true they can do just that. Being a cable box, DVR, and all that means they can don't have to advertise it as just a console and a do-all device for the living room that plays big AAA games will appeal to a lot of people.

The subsidized price won't fool anyone and till sell well. Americans at least and pretty used to buying products this way such as phones and even entertainment devices from places like HSN or RAC. People don't mind they're paying more in the end if they're paying less up front.

Yup, I have to admit that I fall into that category. Halo is my favorite franchise and I want to play 5 & 6 so I'll have to get the next Xbox eventually. Still, unless MS has some awesome, unexpected announcements or Sony screws up royally over the next few months I'm planning to go with PS4 first.